David Koch Retires What Happens Now?

So on June 4, 2018 it was announced that David Koch would retire from Koch Industries citing health issues. In addition to retiring from Koch Industries David would also retire from his board position at Americans For Prosperity. David will still stay on the Koch Industries board as an emeritus director. The letter from Charles Koch to all employees of Koch Industries read more somewhat of an obituary. Charles wrote "My thoughts of David will always be overflowing with the experiences, challenges, laughter, and love of our life together". The one page letter also notes that David helped grow the Chemical Technology Group of Koch 1,000 fold during his tenure.  Koch Chemical Technology Group has 6 different divisions and Bob DiFulgentiz runs the day to day operations of the company. In the roughly 48 years David was at Koch Chemical Technology group he massively expanded the subsidiary of Koch Industries from a single-product business into many different products and services. While David Koch's tenure the subsidiary purchased more than 50 businesses. These days the chemical technology group is sells and offer many different products. The company sells: mist elimination equipment for refineries and chemical plants, sells equipment to purify the water supply, offers products for companies to control their emissions (yes Koch Industries actually sells products that helps companies reduce the amount of pollution), assists companies in turnaround projects (this is typically where a chemical or refinery plant is shut down for some time and the company is performing maintenance or upgrading the plant capabilities).

David started with Koch Industries in 1970 as a technical services manager and founding the New York office. In 1979 he became in charge of Koch Engineering. In his most recent position he was an Executive Vice President of Koch Industries and oversaw Koch Chemical Technology Group. This subsidiary of Koch actually does help companies become more efficient and pollute less. Just recently Koch helped reduce the nitrious oxides emissions of a tomato company by 1,600 lbs in one year even while the company increased doubled the capacity.  David nearly every week would fly from New York to Boston and spend 2 days at Koch Membrane Systems in Massachusetts. Back in 2008 Koch Membrane had sales of $110 million. Koch Membrane turns dirty water from the ocean or that is left over from a refinery and converts it into clean/drinkable water. Back in 2011 the company was building a facility that would be used by local industrial companies that would save enough drinking water to supply 600,000 residents.

What is interesting is that Koch Industries doesn't have a replacement for David Koch. Usually large Fortune 500 companies spend years grooming successors to step in for them to learn the job and also to prepare for situations like this. Also I am sure customers, suppliers, and employees within the company are wondering what the next steps are for the company. The letter that Charles wrote said that David had been hospitalized during the summer of 2016 and at that point had been suffering from declining health. To me this signals that David Koch is in quite bad shape given he really enjoys working. In fact in this Newsmax profile from 2012 he said "my brother and I are going to be carried out of our offices feet first. We'll work until we drop". Koch is known as a hard worker as he often would get to the office at 9 A.M. and stay until 7 P.M. (with 12 hour days not being unusual). For a man nearly 80 years old this could take a toll. In addition to his job Koch also serves on the board of 21 different organizations (this would be a full-job in itself).

Koch has long battled prostate cancer and was initially diagnosed in 1992 with prostate cancer. According to Sons of Wichita in August 1993 after being treated with radiation and finally entering remission thanks to Sloan-Kettering David decided to have a $100,000 fireworks display along with an orchestra champagne soiree at his Southampton place. Back in 2012 David had a bout with diverticulitis and was given antibiotics intravenously for a week and then oral antibiotics. Koch says if he didn't have those antibiotics his colon would have ruptured and he most likely would have died. While in college Koch played basketball and completely wore out his knees which lead to an artificial knee replacement. Koch joked "that if you had spent as many years as I did begging girls for favors, you'd have bad knees too".

Since David Koch is now retired the question is where his shares go to. There are only a few possible options. The first is the shares could go to his wife. Married couples can pass an unlimited amount of money between one another due to the unlimited martial deduction. This would most likely mean that Julia Koch would become a shareholder of Koch Industries and show up to board meetings. This isn't far fetched since Elaine Marshall (the daughter in law of J. Howard Marshall) is currently shareholder of Koch Industries stock. David Koch did mention in this article that "almost all our money is in Koch Industries. Once we pass, our children will acquire the stock". By we I believe he is referring to him and his wife Julie. His wife Julia is roughly 54 years old and his children: David Jr is near 19 years old, Maria Julia is roughly 16 years old, and youngest son John Mark is around 11 years old. Given these ages the children in the future might be involved in the business.

Another possibility is for other shareholders to purchase the interest of David Koch. However, this seems unlikely has his interest in Koch Industries is worth according to Bloomberg is worth over $47 billion and it would be hard for Charles or the Marshall family to come up with that kind of cash since they both have nearly all their net worth in Koch Industries stock and don't have much liquid.

Sometimes individuals with a high net worth purchase life insurance to cover possible estate taxes. They can even use estate planning tricks buy purchasing life insurance and putting it inside a trust to get it out of the estate so it isn't taxed (known as an ILIT trust). According to a court case back in the early 2000's an insurance agent sold an insurance policy to the Koch family and received a $8 million commission for selling the policy. So perhaps this policy was purchase to cover some estate taxes (given that commission it would be hard to justify that all the estate taxes could be covered). According to this article from an agent that was suppose to sell Charles and David Koch on the insurance policy for every $1 of premium would save $9 in taxes which would mean the policy sold to them would avoid $72 million of estate taxes (which yes is a large sum but wouldn't cover the whole estate tax bill). Also Koch could talk to multiple agents and have different policies in place.

In my own view given that David Koch retired I believed he may be near the end. Individuals who work 12 hours days until they are near 80 years old typically don't leave easily unless they are told they must. The most likely situation is the ownership David Koch owns would be transferred to his wife and then ultimately to his kids (will be easier to transfer if they are in the business). Even if you combined the liquidity of Charles Koch, the Marshall family, and the other shareholders I don't think it would be enough to buy out his $47 billion position. If the Koch family purchased life insurance policies this will certainly help but the issue with insurance premiums is the older you get the more expensive the policy becomes (often times making it uneconomical). There is no doubt the future of Koch Industries and who controls it will be interesting.

How Bill and Frederick Koch Walked Away From Billions from Koch Industries

Nearly 6 years ago I blogged about the Koch vs. Koch lawsuit. The lawsuit was one of the longest and most intense family battles in corporate American history. Well that history is all in the past but the question should be asked what if the lawsuit was never filed? What if Charles, David, Bill, and Frederick Koch were still today all shareholders of Koch Industries?

The ownership of Koch Industries stock goes back to the 1960's. During 1966 and 1967 Fred Koch gave all of his stock of Koch Industries to trusts that were created for his four sons. The type of trusts that were created were charitable lead trusts (CLT). These types of trusts pay income to charity for a specific period of time and then revert back to either a spouse or family member and pay income to them. Each brother was the co-trustee of the trust along with First National Bank of Wichita. According to Sons of Wichita in the summer of 1968 Charles Koch offered his brother $120/share for the stock (8 months after father Fred Koch passed). Frederick had roughly 1.5 million shares of Koch Industries stock at the time so his payout would have been roughly $180 million. This was actually a pretty good offer given when Frederick was bought out in 1983 he would receive $200 a year 15 years later.

Disagreements between the Koch family emerged when Bill Koch in July 1980 wrote an 11 page letter outlining how he didn't agree with the way brother Charles was running Koch Industries (he would refer to him as Prince Charles), the level of dividends being paid out, and feeling that the board of directors of Koch Industries were too passive. When twin brother David testified about the 11 page letter that Bill Koch wrote and was asked if these concerns were valid David responded that his twin brother "was always writing letters". David would go on to testify that Bill would be "obsessive" and David would also testify that he would question brother Charles on major company issues but not nearly as contentious as brother Bill was.

According to David "Billy wanted more money..his appetite for money was insatiable". In 1979 David and Bill were each earning $250,000 in salaries as vice presidents, bonuses of $850,000, and then $1.9 million in dividends from Koch Industries stock (in 1980 the dividends alone would be $3.7 million-but Bill thought the dividends should have been doubled). David believed the the compensation "was way more than we deserved". Bill Koch admits in this 2004 New York Times article that he likes to collect everything (he says "my brother Charles collects money, David use to collect girls, but not anymore, and Fred collects castles). Apparently the dividends were not enough to cover his living needs as he told Sports Illustrated that the 7% of company earnings that the company was paying out was quite paltry and he had  "to borrow money to buy a house..and I'm one of the wealthiest men in America". Charles Koch in a recent interview with Peter Robinson would say that Koch had "a small number of shareholders so we can reinvest 90% of our profits in the business so that gave us the capital to continue to do what we do and still pay out enough so our stockholders had all the money they needed".In addition to the dividend Bill also disagreed on the "autocratic" nature of how brother Charles Koch was running Koch Industries. According to Bill "our disagreement in Koch Industries was basically for whose benefit was the company being run". He also said that "I thought it was properly libertarian to let shareholders spend their own money".

Before the lawsuit Charles, David, Bill each owned a 20.7% ownership in Koch Industries. Frederick owned 13.7% of Koch Industries. On June 10 1983, Frederick sold his shares for $345 million and Bill sold his shares for $470 million. Remember this was almost 35 years ago. Typically when people sell that much stock in a small business it is known a liquidity event. Now if they had stayed at Koch Industries with their ownership interests Bill's 20.7% ownership would be worth roughly $30 billion (if Charles and David Koch each own a 42% interest in Koch Industries and their net worth each is currently worth $62 billion this would say a 20.7% interest would today be worth close to $30 billion).  Fredrick Koch has a smaller interest (13.7% in Koch Industries) and using the same logic would be currently worth $20 billion. Frederick Koch is said to be worth roughly $2 billion. Younger brother Bill Koch is worth about $1.7 billion (Forbes March 2018). Bill's net worth in the past few years has been declining (it was $4 billion in September 2012).  Now if Frederick and Bill had invested those monies in the stock market after the buy out in 1983 they would have $15 billion and $21 billion respectively.

In the best case financially would have been for Bill and Frederick to stay at Koch Industries. Bill would have a 20% interest in Koch Industries be worth roughly $30 billion and have roughly $100 million in dividends from the company (based on the analysis I did back here). Frederick would be worth $20 billion if he had stayed at Koch Industries and be earning roughly $67 million in dividends a year (again base on the analysis I did here). Even if Bill and Frederick invested their money in the stock market they would still have much more than they do today. Bill would have $21 billion and with a dividend in the stock market of 2% would be $420 million of cash every year and Frederick would have $300 million in cash dividends. This type of money would allow Bill to buy his art, wine and other collectibles and allow Frederick to purchase castles all across the world. So the question is why don't Bill and Frederick have this type of money today?

Well it appears they both have been spending their money since the 1983 buyout as they don't even have a fraction of what they would have even if they invested the proceeds in the market. Perhaps we could call them the consuming Koch brothers. Bill Koch recently was forced to sell the company he founded (after he was bought out) for $2.6 billion. Frederick Koch who is now in his mid 80's (here he is at a spring gala last year) has has a history of purchasing castles and properties and restoring them. Bill Koch may have complained about the lack of dividends that Koch Industries was providing, however had he continued to stay on he would have a large multiple of the income he receives today. All this illustrates how Charles and David Koch grew Koch Industries while Bill and Frederick cashed out of Koch Industries and consumed most of their proceeds for living needs.

Elizabeth Koch (Daughter of Charles Koch) Views on: Relationships, Sex, Money, Traveling, and Mental Illness

Update: My response to the 2023 New York Times profile of Elizabeth Koch can be found here. 

So Elizabeth Koch is the daughter of the CEO of Koch Industries Charles Koch and really is not known for being in the tabloids or news. I find this interesting considering how often we hear about other kids of billionaires who sometimes get drunk, blow through trust funds, and lead wild and interesting lives. While reading Sons of Wichita I stumbled upon an interesting quote from Elizabeth Koch about her views on money, dating, sex, and even how she views herself. Actually I looked to see where the source of the quote was from and it was from a series of articles that Elizabeth ad published in the mid 2000's on Memoirville. Some of the articles are no longer online and I had to use the Internet Wayback Machine (which is an archive for the internet).

So I stumbled upon something that Elizabeth Koch had written back in 2006. It really is interesting, enlightening, dark, funny, and somewhat sweet/sad at the same time. Back in 2006 (Elizabeth would have be roughly in her early 30's she was dating a guy named Todd Zuniga (they even published a book together which is available on Amazon here). At the time Todd is the founding editor and President of Opium magazine. Elizabeth worked as an executive editor at Opium. He is also the co-creator with Elizabeth of Literary Death Match (were people read their work for 7 minutes or less and then judges decide who had the best material).

So apparently Elizabeth and her boyfriend Todd planned a travel trip that would serve as a compatibility test to see whether or not their relationship would last. Elizabeth moved in with Todd in San Francisco. During this Elizabeth and Todd were running a around the world seeing various places just two months after meeting. During the trip they went to Tokyo, Shanghai, Beijing. During the trip it is apparent that Todd and Elizabeth are constantly arguing but in some rare moments show compassion and love towards each other.

Elizabeth Koch was born in 1975 grew up in Wichita, Kansas and attended Princeton University from 1994-1999 and earned a degree in English. She then earned a graduate degree from Syracuse in creative writing in 2011. Elizabeth Koch is tall, thin, with model looks, and really does not look close to her age as evidenced in this photo.

When reading the articles it is clear that Elizabeth great at writing fiction (I personally am more of a non-fiction reader but found her writing very interesting and it very clear an concise). During the trip Elizabeth takes an introspective view of herself and her relationship with Todd. After losing Todd for a few hours Elizabeth comments, "I cannot go back to panic attacks and meltdowns and doctors and pharmaceuticals and terrifying my parents and staring down that dark well of nothing you do will ever be good enough you privileged waste of flesh". Elizabeth admits to having a "mental illness period" and taking drugs to help and is over it. What is interesting is that Elizabeth is pretty self aware of who she is a person. She describes herself as a "pinwheel of anxiety, a black cough of misery, critical and disgruntled to the extreme". I can't even imagine what it would be like to have Koch after your name.

Upon arriving in Tokyo (tired and hung over) and spending $40 for a cab they find a place that seems run down and not well maintained. So after realizing this they take a cab and book a room at the five star Park Hyatt (one of the more expensive hotels in Tokyo). Currently as I write this post rooms for Park Hyatt are roughly $560 (after converting back to American dollars).  Elizabeth has an interesting quote when talking about staying at the hotel saying "I realize that I'm not one to judge rich people who walk around depressed and semi-suicidal for no apparent reason. Nor am I one to judge rich people who hemorrhage money when their surroundings fail them, as much as I detest that sort of person, for that's precisely what I'm about to do". What is ironic is when pulling up to the hotel Elizabeth feels guilty and almost sick. Elizabeth goes on to say that she knows that her boyfriend Todd is aware of her views on money saying "Todd is fully aware of my disturbed and convoluted relationship with money...I do not toss money around like garden fertilizer, especially not in places where anyone is likely to see me. I want people to like me, and as a small child growing up in a small town, I learned that having money makes people sort of hate you on the spot, so for most of my life I've invested great amounts of creative energy into pretending I don't have any". Elizabeth goes on to talk about being thrifty saying that she prefers "moth-eaten sweaters and flea market jeans", rarely does she wear make up, and her mother (Elizabeth Koch-yes this can get confusing) disapproves that her daughter is "poor-boying it". The daughter feels like she has to spend money to get approval from her mother. Elizabeth admits when it comes to buying items she doesn't like to haggle (compared to her father Charles Koch who will take the hyphen in a 50-50 deal).

Todd and Elizabeth get into a fight over headphones that Todd needs after his headphones are broken. Elizabeth offers to buy the $200 headphones for Todd but then feels bad and doesn't want to deny him something because she knows she has been a pill to deal with. This makes Elizabeth think back to 6th grade when girls on the playground called her "rich bitch" because her last name was Koch.

Speaking of approval Todd went to visit the Koch family for a weekend in April 2006. During dinner Elizabeth felt that she had to justify her accomplishments in the form of a PowerPoint presentation to avoid questions from Charles Koch (her father) like "Are you sure you are busy enough?".You have to remember Charles Koch worked around the clock for many decades (even on Saturdays and holidays) trying to build and grow Koch Industries. During the trip Elizabeth opines about her work history and between 1996-2006 she quit five jobs in publishing and writing, did freelance publishing for 6 months, thought about a quasi memoir (I would have been the first one to buy that book!).The remainder of the weekend Elizabeth was showing her father (Charles) articles about corn subsidies (to prove to her father that she was curious). Although Charles would be proud of his daughter when she observes a hotel and a large train station in Kyoto together which seems to be creating issues that "this is a perfect example of the clusterfuck of misery from central planning". Well I guess those Sunday economic lessons with father Charles Koch paid off.

Elizabeth has a dark view of the world saying that she will kick people out of her life who make her feel uncomfortable, until there is no one left to kick out but her. During the whole trip Elizabeth seems bored, anxious, depressed, and irritable. One morning (they both wake up late) and Todd is interested in having sex and Elizabeth wants to feel some type of connection so they have sex and after sex Elizabeth starts to cry and comments that "For the record sex has never made me feel closer to anyone. Sex has always made me feel like a mutant". Todd also expects to have sex in every country too and when Todd tries to make an advance after they have a fight Elizabeth says he "fucked that one up". On the third date with Todd Elizabeth said that Todd was narcissistic and egotistical and thought that all of these traits would be part of his downfall. Elizabeth says " I want my boyfriend to be strong and confident, and when behaving badly, to verbally knock me around a little".

During her entries Elizabeth does have some funny comments saying if she goes to bed hung over and stuffed (with food) she doesn't want to be touched. Elizabeth has interesting taste when it comes to food as she likes to dunk candy into hard liquor. During the trip Elizabeth gets her mother (Liz Koch) a long bill cap because she knows her mother is out in the sun six days a week paying tennis despite having skin disease.

These journal entries give a rare view into the world of Elizabeth Koch. For some reason there is some mystique about her since she is smart, dark, complicated, irritable, yet can be caring at times. What I find interesting is how much detail she has in the entries she posted. She appears to  have a very good memory and is able to remember the slightest detail during their trip.

These days Elizabeth live in New York and in 2010 founded Black Balloon Publishing (which publishes the unusual, odd, and quirky pieces of work) and continues to run it. Actually her father published a book on Market Based Management (currently he is working on a second book "Good Profit"), Harry Koch (grandfather of Charles Koch) was in the publishing business. It appears the Koch family does have a literary gene.

The future should be interesting as Elizabeth Koch will most likely inherit Koch Industries stock in some form or fashion. The question is will there be a battle with her younger brother Chase Koch (who is now President of Koch Argonomic Services) over the direction of the company which could lead to the lawsuits and legal battles between Charles, David, Bill, and Fredrick. Not only will Chase and Elizabeth be likely shareholders of Koch Industries stock but in addition to this David Koch said in this interview that most of his net worth is in Koch Industries stock and his children (David Koch Jr., John Mark Koch, and Mary Julia Koch) will inherit the stock. So between these five children will own about 84% of Koch Industries stock with the remaining 16% held by the Marshall family. This could lead to an interesting situation where the family has to offer multi-billion dollar buyouts to relatives if certain family members simply just want to cash out. I would be interested to see how Elizabeth Koch will respond to this. Will she continue to be a publisher and writer or will she change her mind once she sees how much Koch Industries pays in dividends and begin living a different life style? I personally could see her inherited billions and continue to publish and write and continue to do with what makes her happy. Her writings show a very complicated, guilty, and almost torturous  relationship with money. However, it will be interesting if the money will make her have feeling of guilt and anxiety. After doing this research on Elizabeth Koch I truly find her the most fascinating Koch of all.

Koch Industries (Koch Brothers) Actually Decreases Pollution and Recycles

So I have been following the Koch brothers/Koch Industries for a while. You often hear of many reports about how Koch Industries pollutes and is making the air and water dirty for everyone else to breathe. However, do Charles and David Koch breathe different air then the rest of us?

I have to admit even I thought Koch Industries made pollution a tad worse until I actually looked at some data. I found reports (this link has all years I will refer to) that showed they do indeed reduce their pollution, recycle, and are actually more green than most people think. The latest Koch EHS report from 2014 is here. 

Currently about 90% of Koch facilities are STAR certified. STAR certified is a voluntary program from OSHA that companies voluntary join in order to make their workplaces safer than even OSHA regulations. A better explanation of this program is explained here. Because STAR sites are safer (because of voluntary actions of the company) they are rechecked every 3-5 years instead of every year. OSHA reviews incident rates every year though. However, as we will see Koch through continuous improvement has reduced emissions and made their work environment safer.

From 1997-2006 Flint Hills Resources refinery in Rosemount, Minn (this facility is very large-as I have actually driven past it) decreased emissions of carbon monoxide, nitrogen oxide, and sulfur dioxide by 53%. Also in 2006 criteria air emissions were .07 pounds per barrel of refining capacity, which was 65% less than the industry average of the 50 largest refineries in the country. As of 2012 the Flint Hills Resources in Corpus Christi, Texas went 12 years without a lost-time incident. Even the Obama administration praised Flint Hills Texas facilities. In 2000, a senior EPA official praised Koch because their Koch Petroleum Group agreed to reduced emissions by 60,000 tons annually. 

Koch invests 90% of their earnings back into the company. Much of this is to improve or upgrade existing facilities. In 1999 Koch introduced a low sulfur product six years before federal standards would be mandated. The company spent $200 million at the Pine Bend refinery (which produces low sulfur fuels). At a Koch Mont Belvieu, Texas facility decreased plant flaring by 95% which decreased emissions from 40,000 pounds in 2000 to about 2,000 pounds by 2003. 

People forget Koch Industries has a division that actually purifies water (Koch Membrane-which David Koch is in charge of). Koch Membrane provides drinking water to municipalities which use cartridges to clean out the water and can clean millions of gallons of water every day. In fact Koch's reverse osmosis module removed 99% of total arsenic in order to provide clean water to agencies and municipalities. Is is ironic that critics claim Mr. Koch is polluting the earth when he runs a division that purifies water!

In 1997, Koch Petroleum's refining operations had 45% fewer criteria air emissions that the average amount peer refiners. By 2000, Koch Pipeline transported 650 million barrels of liquids (including crude oil, natural gas, and other chemicals) and only one quart of product even touched the water. Between 1995-2000 Koch operated pipelines were able to reduce their leaks by 92%. In order to run these pipelines Koch spent $33 million in order to build a control center that had a fiber optic cable, customized software, plus a power supply that isn't uninterrupted.  In December 2012 Koch Pipeline and Flint Hills Resources went 8 years without a lost time incident. Speaking of Flint Hills from 1997-2012 the company reduced its emissions by 76% and emissions were 38% lower than peer refiners for 2012. 

Koch Industries is also into recycling between 1999 and 2000 Koch Industries more than 326 tons of material which was a 19% increase.  From 2000-2003 the recycling amount per person increased 29%.

Koch operates in a pretty safe environment.  Koch's Matador Cattle company for many years has operated with no incidents. Koch Aviation which flies about 2,300 hours per year had a four year OSHA recordable injuries in the mid 2000's that was 80% lower than the industry average. John Zink worked more than 4 million hours and 850 consecutive days without an injury resulting in time away from work. John Zink at this time had 700 employees working 1.7 million years annually. In 2006 six Georgia Pacific facilities had more than 1 million hours in each facility without a lost day of work. A Koch Nitrogen facility in Oklahoma recorded 3 years with no lost time injuries. An Invista facility in the Netherlands went 15 years without a lost workday case and Invista site in Brazil went 32 years without a lost time injury! At the same plant from 2003-2011 which makes LYCRA fiber reduced the amount of water used and actually saved enough water to fill 80 million one litter bottles.

To my knowledge Koch no longer explores for oil/gas. The company does refine oil which is turning the crude oil into other byproducts that are used into everyday goods like plastics. Koch just purchased Molex which is a connectors company that makes connectors for iPhone and other electronic devices. The company makes plastics, fibers, refines oil/gas, minerals, fertilizer, sends oil and gas through pipelines, and even does ranching. It seems as if though Koch Industries voluntary invests 90% of their earnings back into the company to make company assets and employees safer. By reinvesting the earnings back into the company Koch increases productivity and reduces lost work time due to accidents. By reducing the amount of waste Koch is able to make more money and use fewer resources. How many people would have guessed that Koch Industries actually reduces pollution and makes the world a greener place?

Koch Update: Daycare Facility, David H. Koch Plaza, Newspapers, and New Wild Bill Koch Interview

So while I have been away it seems as if the Koch brothers have been making the headlines. One I forgot last year was David Koch made it finally possible for MIT researchers to have a daycare center that would double the size of the daycare facility population (providing daycare for 126 children) and will open in August 2013. Actually the whole idea came about when a post-doc woman was sitting next to David Koch at dinner one night and talked about the state of the daycare at MIT.

In another Koch related news David Koch donated $65 million to the groundbreaking ceremony video can be seen here (Koch makes some remarks at around the 1:26 mark). Construction won’t be done until the fall of 2014. I always wonder why liberals hate David and Charles Koch so much when they give to causes like the arts that liberals and the general public tend to enjoy.

Bill Koch has been in the news as well. Bloomberg had a story a few weeks ago discussing the false imprisonment suit. In probably one of the most bizarre Koch lawsuits to date former Oxbow employee Kirby Martensen claims he was held against his will. Judge Jacqueline Scott Corley dismissed the lawsuit Martensen brought however claimed that she didn’t buy Koch’s arguments. The case is being retried and the name is Martensen v. Koch.

In somewhat Koch Industries related news Daniel Fisher of Forbes had an excellent story (his writing is superb) on the Marshall family (who are still to this day part owners of Koch Industries) describing how J. Howard Marshall II (the guy married to Anna Nichole Smith) and his family are having a fight not between family members but also the IRS for gift taxes owed. Last year Bloomberg discovered through tax documents that Elaine Marshall owned 15% of Koch Industries which gave her a net worth of $12.7 billion. It is somewhat interesting that if a few court decisions had gone a certain way Anna Nichole Smith could have ended up with ownership of Koch Industries. Fisher discovered some great primary documents like this tax court document for J. Howard Marshall II.

The most recent news that has been talked about is Koch Industries maybe purchasing the L.A. Times. It would be interesting to see market based management journalism. First I really don’t know how true this rumor really is. Also newspapers have been a dying breed as revenue is at an all-time low (even after adjusting for inflation).  The Koch’s grandfather Frederick Koch did run a news paper in Quanah, Texas.  Speaking of Koch Industries I forgot to point out this article (again by superb journalist Daniel Fisher) which describes how Koch Industries reinvests 90% of their earnings into the company while correctly pointing out that both Charles and David may have issues down the road in terms of succession planning. With a net worth of $34 billion each and 84% ownership in Koch Industries it makes estate planning difficult even though Charles claims they have been doing estate planning for years. Actually the serious estate tax bill will come not when Charles and David pass on but when their wives pass on.

Lastly and maybe one of my favorite parts is that Bill Koch actually granted an interview (7 pages worth) to 5280 (a Denver magazine). It seems like Wild Bill is spending a lot of time on the ranch working out details. Koch seems to be putting forth a lot of effort in getting the history correct and everything historically accurate. The town will be intended to be a private getaway for him and his family. The goal of his town is to all have a place to come to as they grow older and have their own families. After decades of battles between Charles, David, and Bill I guess Bill has come to realize that fighting between family members really doesn’t lead to anything good.  Bill Koch’s twin brother David Koch apparently was interviewed too and admitted in his younger days he was more interested in the popular people on campus, the girls, and the athletes. David also said that Bill was the more serious student. Bill like his brothers David and Charles had to work on the ranch (beginning at age 13 and worked 12 hours a day, seven days a week). Bill in the interview also discusses the incident with Martensen and said Oxbow became aware in 2011 of possible misconduct by Martensen and through an internal investigation (e-mails, recordings, and over 4 million items in total) Martensen was planning a scheme. When confronted about the wrongdoings Martensen admitted to some of it. The whole ordeal sounds bizarre about detaining an employee and a trial, judge, and jury will have to decide the outcome. Toward the end of the interview Bill mentions he wants to live the rest of his life in peace, spend more time with his family, and hang out in his own town. The governor of Colorado would like Koch to open the town to high paying visitors and school children (Koch is unsure if this is the right move however how often will his family even “use” the city”?”

Bill Koch is probably one of the most interesting people I have ever read about. The Koch brothers are fascinating as well. Whatever side of the political spectrum one is on I think people can agree they are interesting, controversial, and I have learned so much from studying the history of the family. I can say one thing is for sure there probably will never be a family as interesting as this. 

Bill Koch Counterfeit Wine, Sailing, and Book

Bill Koch apparently keeps himself in the news. On Friday November 9, 2012 Inside Edition aired a story that actually featured Koch discussing counterfeit wine as I mentioned in this post. Koch told Inside Edition that he has spent over $4.6 million on fake wine. Even Koch admits that there will not be much sympathy for a billionaire.

In other news Bill Koch has also contributed $500,000 for a sailing exhibition at San Diego Halls of Champions in San Diego (it has been around 20 years since this happened). The exhibition will be available to the public. I have actually started a book about Bill Koch called “To The Third Power”. I have started the book and learned even more about Bill Koch then I did before. For instance Bill Koch graduated in the top 10% at M.I.T.. The book is really about how Koch guided his team to win the American Cup in 1992. I would point out that it was not a cheap one but it seems so far there are some lessons to be learned from a management perspective. I continue to learn more about Bill Koch and find him a very interesting character.

Newsmax: David Koch Speaks

I saw a preview of a profile David Koch did for the November 2012 edition of Newsmax magazine. As you know I have extensively probably more than any other blogger out there covered David Koch has given up to August 2012 $305 million to charity, how he endorses gay marriage, an analysis of David and Charles Koch net worth from 1984-2012 here, and even covered his dating here. Regardless of what your political affiliation is David Koch is truly an interesting person.

The article itself offers a pretty good interview with David Koch. I have read so much about David Koch and the Koch family nothing really is that new (however I did learn even in this article). The first is David Koch denies starting the tea party which is true since it was actually started by Rick Santelli after this famous rant here on CNBC. He also points out that inflation will soon come as the Treasury department with their quantitative easing program (QEinifity). What I probably found most interesting was the work life of David Koch. He wakes up at 7:30 A.M. eating his cereal and yogurt, then makes sure his kids get off to school and is taken to work and is in by 9 A.M.  Many people may believe David Koch doesn’t work hard however he stays until 7 P.M. before leaving to go home to see his wife and 3 kids (David Jr. Mary, Julia, and John Mark) and has a personal chef cook. Speaking of food Koch tips 15% when he goes out to eat which contradicts this foolish article from Bloomberg claiming he was the worst tipper at 740 Park Avenue. Although, he did give all the door men a $50 Christmas bonus (Park Avenue: Money, Power, and the American Dream is unfortunately  airing on November 12 on PBS and I have a feeling I am forecasting nausea in the near distant future after simply looking at the trailer).

Some other cool things about David Koch is that he charters a yacht on the French Riviera and some Greek Islands. Koch enjoys reading about the Founding Fathers and watching sports and documentaries. Another interesting fact I learned is that he doesn’t use the internet. From a Market-Based Management prospective I wonder if he could add value by having e-mail? Growing up David along with his other brothers had to do ranch work. Hard to believe now but David did actually work on a farm ranch driving bulldozers, operating hay bailers, fixed farm equipment, and dug ditches. When he asked his father for a quarter to buy a candy bar his father Fred Koch said he wanted his sons to “appreciate what money meant”, meaning the Koch brothers had to actually work for it.

David Koch runs an interesting group at Koch Industries known as the Koch Membrane Systems group. I blogged about Koch Membrane here.  Basically the company can turn salt water into drinkable water or water used for commercial purposes. The technology seems pretty cool and David has been interested in the technology since his days at MIT. Just about every week Koch flies to Boston and spends two days working at Koch Membrane. David finds the technology interesting and many opportunities available in the industry.

David Koch is also for same-sex marriages (people forget he did run as a libertarian candidate). On Obama Koch calls him, “charming” yet rightfully criticizes the President for attacking businesses who actually do create jobs. Koch would like to bring spending down to 19% (from 25% at present day). What is interesting is that Koch supports a tax increase if it is necessary to win support from Democrats to vote Republican however, Koch would want spending cuts to be five times greater than any tax increase.

The article is interesting and good for someone who does not know much about David Koch. I have said many times on this blog he is an interesting, caring, and generous individual. I really wish he would publish an autobiography since he is truly fascinating no matter what side of the political spectrum you are on.

David Koch 2011 Hope Funds Fundraiser for Cancer Research

People forget in the 1990's David Koch suffered from prostate cancer and still deals with it to this day. He has raised hundreds of millions of dollars to support places like M.D. Anderson Center in Houston, John Hopkins, and a $100 million facility at MIT to promote cancer research. Too bad you will never see this kind of video on MSNBC...

William I. Koch vs. Koch Industries The Family Lawsuit

I found an interesting find in the William I. Koch vs. Koch Industries trial that I covered in a previous three part series (part1, part2, part3). The document I found was 112 pages (much of it talks about historical court cases). What is even more interesting that the court case had 10,000 pages of exhibits (which would be twelve feet in a library).

William and Fred Koch along with other plaintiff dissents) owned 47.8% of Koch Industries stock. Fred Koch (father of all Koch brothers) set up trusts in 1966 and 1967 which gave all of his shares to his sons except for Frederick (some speculate it was because Frederick stole petty cash from the family). The trusts were actually interesting because the income of the trusts was paid to charity for 20 years and t he principal would be paid either to the Koch brothers or to some beneficiaries. Today, these are known as Charitable Remainder Annuity Trusts (CRAT trust) which is creative today and must have been innovative back then. According to the court case Charles began working at Koch in 1961 and became an officer one year later and was elected president in 1966. David came on board in 1970 with William joining in 1974 (three years after he completed his PhD from M.I.T.) William rose to become head of Koch Carbon in 1976 and was elected vice president of corporate development for Koch Industries in 1979.

In March 1980 William wanted more liquidity and cash flow for Koch Industries. Charles came up with an estate planning and liquidity program while Don Cordes and Tom Carey of Koch Industries talked to the plaintiffs to help them with any issues or concerns they had.  In the mean time William Koch didn’t like how Charles was running the company and talked to the plaintiffs. William talked to the plaintiffs to try to change the board of directors to do what they wanted.  The deal breaker would be J. Howard Marshall III who would help William, Frederick, and the other plaintiffs to gain a majority interest (over 50%).  Marshall III owned 4%. William however knew he had a problem because he didn’t have the number of shares he needed to elect a new board of directors. To fix this William called the First National Bank of Wichita and wanted to add two new directors. Charles hopped on a plane to see Marshall II to see if anything could be done. According to J. Howard Marshall II autobiography “Done In Oil” Charles went to visit Marshall II and Charles asked “What do we do now?” J. Howard Marshall II who himself was a business man after spending many years in government agencies suggested that he would offer his son $8 million $203 per share for the Koch stock that would change the board. Marshall tried to make it more of an emotional offer and his son took it. William got wind of this and increased the offer price to J. Howard III.

At a December 5, 1980 meeting Stuart Varner who was a board member of Koch Industries suggested that William Koch be asked to resign. William didn’t want to however the board thought it was time for him to go. In 1981 William hired Davis, Polk, and Wardwell to represent him and Morgan Stanley and Lehman Brothers were also brought on to determine what if Koch Industries should be publicly traded to fix the problem of liquidity and cash flow that William had been complaining about.  In a May 18, 1981 meeting the estimates from Morgan Stanley and Lehman said Koch Industries could sell between $140-$170 per share. Charles thought some of these figures were high because they did not take into account working capital. Both Morgan Stanley and Lehman said Koch Industries should not go public unless it needed to.

In 1982 Goldman Sachs was brought in and examined 100 pages of evidence from Koch Industries analyzing historical earnings balance sheets from 1977-1982. Goldman came up with a value of $1.6-$2.2 billion and valued the stock between $110 and $140 per share. William did not like this number and questioned Goldman Sachs about whether they were doing analyzing their discounted cash flows models correctly (used to figure out value). William then brought in Bain & Co. (keep bringing in advisors until you get the number you want right?).  Lehman revalued the shares in July 1982 and came up with an average of $175 per share.  On July 26, 1982 this profile came out in Fortune that discussed part of the battle that had been going on at Koch Industries. By October 1982 the case was even affecting mother Mary Koch who called Don Cordes and was upset that the Koch brothers were not able to solve their issues in court. By November  of 1982 Bain had come up with $187 per share while William and Bain wanted to make a counter-offer of $240 per share or a 28% premium. The plaintiffs all got together and met with Goldman Sachs and Bain & Co and agreed on the $240 per share counter offer. Koch Industries however did not think $240 per share made any sense after Lehman said it was really worth $140 per share. Koch countered with $167 per share ($95 in cash and $72 over a 15 year period at 10% interest). The plaintiffs did not want this because when you calculate a present value it was very low compared to what they thought they could get. William thought the stock was worth $212-$245 per share. In May 1983 William gathered up the plaintiffs to discuss what they all thought a fair price was. William of course wanted more than everyone else and the group also had to determine the cost of waiting out the ligation.

Finally at midnight on June 4, 1983 the final draft had been approved by both sides with the deal closed only six days later.  The plaintiffs were paid $200 per share on June 10, 1983 (the legal cost for “experts” was over $1.5 million). Charles, David, and William at the time each around 20% of the common stock (Fredrick owned 14%). The Simmons family (Mariorie Simmons Gray, Ann Alspaugh, and others) owned 13% and J. Howard Marshall II owned 8% (the one who married Anna-Nicole Smith). Koch employees and other people owned just 4%.  

Not only did the plaintiffs get a $200 share price but they got part of an offshore exploration property. This was however short lived as Bill Koch believed that brothers Charles and David Koch had cheated them out of money.  On December 31, 1982 the book value of Koch Industries was $1.54 billion (meaning what the worth of just its assets). The company in 1982 earned after tax earned $309 million. The company had a book value of just $133 per share.

This whole share price war reminds me of the classic book “Barbarians at the Gate” which discusses the merger between Nabisco and R.J. Reynolds with investment bankers coming up with higher and higher offers but made crazy assumptions. The Koch trial seems to be similar. Koch Industries told William Koch what the company was worth but William wanted a higher price. He kept hiring advisors to tell him his higher number was right. However, in the end I think William Koch made out pretty well.  When the whole thing was said and done Bill walked away with a $500 million check. William is now worth $4 billion. Not too shabby if you ask me. 

Charles Koch Relentless Goals: Being a Billionaire, Death Threats, and Giving Back

Source: Wichita Eagle

Apparently, the Wichita Eagle gave me an early Christmas present with this recent profile of Charles Koch. In 1998, Bob Cox of the Wichita Eagle did an in depth profile similar to this one.  The Koch family seems like one interesting family with David, Charles, and Bill. This profile shed light on who Charles Koch really is.

In the article it discusses how Charles Koch gets his hair cut from his wife (even though he is worth $31 billion and historical net worth 1984-2012 here) because he doesn't have time to go to the barber. Koch also use to be an avid skier until his knees gave out and has had both knees replaced and his right shoulder. This was after years of playing tennis, squash, golf, and polo.  These days he works out for an hour and a half doing weighting lifting, Pilates, and aerobics and follows a strict diet. He was diagnosed with prostate cancer in 1999. Koch is very competitive. When he played tennis with his friends and wife he hit the ball so hard that it hit the woman in the lip causing his wife Liz to curse him out.

His wife Liz has been at his side for their 44 years of marriage (which seems rare these days). She claims she is only one in the relationship that let her hair grow out.What is funny though is that when Liz first met Charles he wore a strip shirt and madras (picnic shorts). Liz also put up with Charles having books all over their apartment when they were first married when Charles was teaching himself about different subjects (economics, psychology, history) in the 1960's that Liz didn't even have a closet for her clothes. Even brother David Koch admits Charles reads "like a demon".

Charles was also competitive in the business world as well. Right before he joined his father’s company it had $70 million in annual revenue in 1960. In 2012, this number increased to $116 billion. Koch is a hard working man who is always working. His father Fred yelled at him when he was trying to save money for estate taxes (estate taxes have to be paid 9 months after death which makes it hard if your assets are all tied up in company stock). Charles bought two trucker companies (instead of one) and his father was furious with him. I personally think Koch is a workaholic however I think one of the side effects is becoming a billionaire. He also doesn’t like wasting time as he listens to audio books in his car because why waste 10 minutes of time. He doesn’t seem to work for money.  Charles Koch wakes up every morning to do what he loves doing: running a business. He doesn’t plan to retire and probably will work until he dies.

Growing up in the Koch family wasn’t easy either. The tennis gene must of rubbed off on his son Chase Koch because he appeared in Sports Illustrated under “Faces in the Crowd” in 1996 for a stellar tennis record. Just three years earlier Chase hit and killed someone in an accident. People make mistakes no question and growing up with Charles Koch probably wasn't easy as at 13 years old Chase had to go out and do work on the cattle feedlot in western Kansas. Charles said he thought his son believed he would have a full time job and be able to go out with his friends as night in Kansas. Chase worked 12 to 13 hour days 7 days a week as well. Charles when he first started work at Koch worked 7 days a week too. Charles preached family values and economics to his kids. Every Sunday afternoon Charles would teach his kids about economics. Chase would go to sleep while daughter Elizabeth would act interested. Chase who is not 35 now Vice President of Koch Agronomics Services. Elizabeth graduated from Princeton in 1999 is 36 years old with a degree in English literature and an MFA from Syracuse in 2011 and now works at Black Balloon Publishing in New York. The Koch kids seem to be good people or done anything crazy that has got in the press.

What truly is crazy is that the Koch family gets hundreds of death threats from wackos all the time. Not only this but Koch Industries has received cyber threats, bomb threats, and employees have also been threatened to. The family has a result has to hire security guards around the clock to protect themselves (tax increase I would point out). This seems pretty crazy for guys that just want to spread the good word of liberty, limited government, and prosperity. Speaking of prosperity Charles points out that "even those who live in poverty, have more money and opportunity for jobs if they live in a free-market economy rather than one controlled by dictators".

I consider Charles Koch to be a great American. Greatly expanding a business his father started into a $115 billion per year is not easy. In addition to creating jobs, improving the economic condition of his own 60,000 employees he is trying to spread the message that free markets actually do improve the life of everyone (even  poor people). I personally don't think Charles Koch is motivated by money. He is motivated to do the right thing by explaining not only how he was successful but how other people can be successful. In addition to all of this, he and his brother David have given $46 million to local Kansas charities and $1 billion in the last 12 years to various causes. If after reading this you don't have any respect for Mr. Koch you probably don't have any decency. 

Bill Koch Holds Kirby Martensen (Oxbow Employee) Captive?

Today, I just learned of this bizarre news story from Oxbow Energy (especially for a Friday afternoon). Oxbow says it began a year long initiation beginning in March of 2011 to investigate whether a certain executive was trying to defraud the company of $40 million. Oxbow claimed an employee named Kirby Martensen was getting kick backs.  Martensen who worked for Oxbow Corporation for 16 years relieved millions in compensation and bonuses. As you may know I have covered Bill Koch in numerous places in his profile here, his school days, and the $1.3 billion family lawsuit with Charles and David Koch.

In this news story it is alleged that Kirby Martensen who was an executive for Oxbow Energy was held captive by Bill Koch. Martensen was promoted to be the senior vice president of Asia. Interestingly more than 75% of Oxbow's fuel grade petroleum exports profits come from just the Asia operations. Martensen is claiming that Oxbow was trying to relocate part of the company in order to evade $200 million in taxes.What is interesting however and maybe something Bill Koch can use in his defense is the fact that Martensen himself was alleged to self dealing, stealing, and breaching a fiduciary duty. Koch did a review of thousands and found Martensen was worried about if Oxbow was actually doing things that were legal.

Martensen claims that Koch tried to discredit him and used "false pretenses". The story gets a little stranger when Koch drove Martensen to Bear Ranch for the night and had breakfast the following morning. Koch showed Martensen around his private city. Martensen was then interviewed for his peer review and which lasted several hours and seems was a meeting to tell him he was going to be terminated. After this he was escorted to pack up his stuff and a sheriff wasthere to escort him out. After this the story gets bizarre as Martensen claims he was kidnapped and taken to the Denver airport for a 2 in the morning flight on March 23, 2012 on a private plan that went from Denver to Oakland, California. Martensen then basically left refusing to go to the Marriot Courtyard Hotel. In this whole process Martensen claims he suffered from anxiety, fear, humiliation, and distress.The official charges are false imprisonment and civil conspiracy. Martensen has already hired John Houston Scott (because three names just makes you sound smart) from San Francisco to defend him.

Bill Koch has a history of losing court cases. He lost the $1.3 billion case against his brothers. He lost the case against the wine he claimed was counterfeit wine. Last year he was in a lawsuit for real estate having to do with his private school. I haven't even touched the numerous lawsuits he has got into with his love life. In general Koch is on the wrong side of the lawsuit however the accusations made seem like something out of a John Grisham novel and the truth remains to be seen. A book could probably just be written on Bill Koch's court decisions. No question though Bill Koch is an interesting man and which is why I continue to blog about him.

William Koch: Culver, MIT, and Other School Days

After making the comment that William Koch had learned nothing after 13 years and getting three degrees from MIT including a PhD in chemical engineering I did some research to learn more about his school days.  I found this profile from his high school Culver Military Academy where he graduated in 1958. It should be pointed out that Charles Koch also went to Culver Military Academy but was expelled after drinking on a train. Even though students go to places like Culver before college it has more of a college schedule with Wednesday being the busiest day with activities from 8:20 a.m. to 11 p.m. There is no surprise that 99% of the graduates matriculate into colleges.  It is interesting the classes are ranked by how much time it takes students on homework. So for example a Level A class will take less than 30 minutes in homework per class while a Level E class will take more than 90 minutes per class of homework.

William seemed pretty busy when he as at Culver. He was on cross country, basketball, track, football, baseball, boxing, volleyball, softball, and graduated cum laude. According to the June 1994 edition of Vanity Fair from an article called Wild Bill Koch’s Grand Desires by Bryan Burrough, William as a kid was “nerdy, awkward kid”. He also like to start mischief when he was six he swallowed a hog ring which lead to a hospital visit where they had to pump it out. He was also competitive and didn’t like to lose. The Koch family had a pool growing up and William got upset pretty easily and sometimes would go crazy. In one instance his twin brother David Koch was hit with a polo mallet and David fought back. In a very dangerous fight William got a butcher knife but finally put it down after he realized he could kill his own twin brother. During middle school at the age of 13 Bill almost failed out (interesting for someone who later got a PhD in chemical engineering) and says he was clinically depressed. William went to M.I.T. like his older brother Charles and all joined Beta Theta Phi, where William was the house “humorist”. William was also a pretty decent athlete making the basketball team at M.I.T. his freshman year. Twins David and Bill both got their master’s degrees in chemical engineering by 1963 however they both took different paths. David went to go out in the real work and work while William spent the next eight years at M.I.T. getting his PhD. David claims his twin brother William had a country club attitude when it came to school, and just “lazy years, full of days tinkering in university labs, playing rugby, and chasing women”. Perhaps spending a total of 13 years in school was a way for William to avoid having to work in the real world which makes his comment about never really learning anything even more interesting.

As people say it really isn’t where you start out in life it where you end up. William Koch seems like he has gone through many different things in his life time (depression, various lawsuits, and marriages). However, today he is waking up everyday going to work in charge of Oxbow Corporation and worth $4 billion. If you read he was on the verge of flunking out of middle school you might not have guessed he would have been a billionaire or ever got a PhD. 

William Koch: Wine Lawsuit, Chamber of Commerce Meeting, and Not Learning A Damn Thing At M.I.T.

As you may know I have covered William Koch many times before in a profile, the $1.3 billion lawsuit, and his own private town. In recent news it was decided in court today that Koch waited too long to file a lawsuit against Christie's after Koch had purchased a wine was supposedly belonged to Thomas Jefferson. Judge John G. Koetl wrote a 38 page opinion (I guess he had a lot to say about it). There is what is known as statue of limitations that basically say if you are harmed you have a limited period of time before you can come forward and after that you can’t really do anything about it. I taught in my business law classes it was 3 years but in this case it was 4 years starting in 2000 and Koch waited until 2005 to file the lawsuit. The bottle was bought in 1988 for $100,000 and relied on Christie’s for representation. Koch filed the lawsuit after he sent samples to the Woods Hole Oceanographic Institution to carbon date it and they said it had less of than a 5% chance of being from the period it was claim to be from.

In other news, William Koch made an appearance recently at a Chamber Commerce of Breakfast that was held 7:45 a.m. on October 2, 2012 at the Palm Beach Chamber of Commerce. Tickets were only $30-$50 for non members or guests. I found this  article from the Palm Beach daily News that actually talked about the event. Apparently there was an audience of 570 people which is pretty good for 7:45 in the morning. William introduced himself as “just a hick from Kansas”. He claims that he was a nerd while at M.I.T. and couldn't compete with the Harvard men when it came to getting girls. William is married to Bridget Rooney who has a family that owns the Pittsburgh Steelers (mother in law refers to Bill as poor Koch brother even though he is worth $4 billion). My favorite part is that even though he got three degrees from M.I.T. (including a PhD in chemical engineering) he claims he didn't learn “a damn thing”. During he said that he learned from trial and error (mostly error he says). He also lost $200 million over is careers in bad business deals (one of them was Checker cab and an onion pill to lower cholesterol while he was at Koch Industries).  On management Koch believes that you have to find great people and motivate them through bonuses and money to entice them.

William Koch is a truly interesting person. He seems like the type of guy you would want to have lunch or dinner with and hear his life story of the good, the bad, the ugly, and interesting. In this recent article Koch revealed his literary side in front of presidential candidate Mitt Romney. Romney was at Koch’s home and Romney had mentioned the book “Men to Match My Mountains” and Koch said, “You know, the title of that book comes from a poem” and then Koch recited the whole poem from memory.  I hope Bill Koch writes an autobiography one day so we can all learn about his interesting story. 

David Koch New York Ballet and Federal Spending

                                                              Source: Bloomberg

David Koch has support the New York Ballet for years (he even gave them $100 million). Last night he was spotted with his wife Julia and Bloomberg in this story caught up with him. I didn’t know that he has been going to the ballet since the 1960’s and seems to really enjoy it. Koch mainly talked about his support for Republican presidential hopeful Mitt Romney. As you can see in the picture from above Koch was wearing a burgundy colored velvet jacket made by the House of Maurizio (he in some ways looks like a movie usher with $31 billion). I didn't know this but Mr. Koch also likes to drink vodka and tonic and really isn't a champagne drinker. He enjoys very fine wines including red burgundy, red Bordeaux, and white Burgundy.

When talking about political issues David Koch who is really has more libertarian leanings supports Mitt Romney believes Romney has to do well in the debates to have a good shot at winning this election. Currently Intrade has Obama’s chances of winning the election at 72% which has constantly been increasing (especially after Romney made his comment about the 47%). Koch also pointed out that “We know with mathematical certainty that without mass reduction in federal spending we’ll go the way of Greece”. David Koch is absolutely right considering the over $15 trillion in debt the United States currently has and the annual trillion dollar deficits we keep running. Heck even if the government just spent what they brought in we would be much better off. This leads me to a scene in the 1985 movie “Real Genius” with Val Vilmer where Vilmer figures out that using ice is needed to solve a solution. Vilmer proclaims “ice is nice!” We could apply the same analogy to the federal budget and just freeze spending.  At a baseline we should be getting rid of programs that overlap each other. Currently 126 programs are used to fight poverty. Why not reduce this to 1 or 2? The government should have a consulting company like McKinsey or Accenture come in and explain how they can cut costs and improve efficiency. If only the government thought more like business owners we would all be better off.